As one of the pioneers of streaming video devices, most consumers associate Roku (NASDAQ:ROKU) with the boxes, dongles, and smart televisions that make it easy to access your favorite streaming service. While those devices still make up a large part of the company's business, a change in strategy before its IPO saw Roku pivot to focus on its platform business.

By charting a new course and chasing after an often ignored part of the streaming market, Roku has propelled its stock to gains of over 1,000% since its public debut.

A Roku TV with shortcuts to Netflix, HBONow and The Roku Channel.

Image source: Roku.

What's driving Roku's performance?

Roku made its debut on the public markets on Sept. 28, 2017, and the company priced its shares at $14, and the stock began trading at $15.78. At the time, Roku counted 15.1 million active accounts, a 43% year-over-year increase, and logged 3.5 billion quarterly streaming hours, up 60%. Roku was banking average revenue per user (ARPU) of $11.22, up 35% year over year. In the nine months leading up to its IPO, Roku generated revenue of $324 million, and most of that came from the sales of streaming devices. The company had losses of $70 million. 

In regulatory filings before its IPO, Roku said: "We are in the golden age of TV. Our mission is to be the TV streaming platform that connects the entire TV ecosystem." 

Now, just two years later, Roku's active accounts have more than doubled to 32.3 million, and streaming hours have tripled to 10.3 billion. ARPU has also doubled to $22.58. Trailing-nine-month revenue has grown 121% to $718 million and its platform -- led by advertising, The Roku Channel, and its smart TV operating system -- is its fastest growing segment and responsible for the lion's share of its sales. 

From humble beginnings

Many investors may not know that Roku's original streaming box was the technological brainchild of streaming leader Netflix (NASDAQ:NFLX). In 2007, Netflix had spent a lot of time and resources to develop a device that consumers could hook up to their TV to simplify the task of streaming internet video. The Netflix Player had been years in development and testing, and the hardware was just weeks from shipping when CEO Reed Hastings had an epiphany. He realized the platform had to remain agnostic. If not, Netflix would be competing against the very electronics and technology companies it was courting to include the ubiquitous red Netflix button on their remote controls. 

To avoid tensions with partners, Hastings made the decision to spin off the device and its team into a separate company that would become Roku. Incidentally, the man in charge of the team that developed the streaming device was Anthony Wood, who now serves as Roku's CEO.

It was another 10 years before Roku went public.

The Roku Premiere with its box and remote control.

Image source: Roku.

A little math is necessary

So just how much would an investor have if they had invested $1,000 in Roku's IPO?

Most individual investors would have been hard-pressed to get shares at the price set by Roku of $14 for its IPO. It's more likely that shares could be had for near the price they began trading of $15.78.

If an investor were lucky enough to get Roku for that price, $1,010 would have purchased about 64 shares. Now, just two years later, those same shares are fetching $161.64 each, meaning an initial investment of $1,010 would have grown to $10,345 -- yielding more than 10 times the original investment.

It's important to note that these gains didn't come in a straight line. Roku has been an extremely volatile stock. On multiple occasions, Roku has lost more than 40% of its value and endured many, many more double-digit gains and losses in route to its overall momentous gains.

This illustrates one of the harsh realities of investing: It takes a certain temperament to endure the high's and low's that can eventually lead to a windfall.